Goldman lowers ratings, target prices on discount brokers
Discount brokers lost a vote of confidence from equity analysts at Goldman Sachs Group on Monday. In a report, Goldman cut its recommendation on TD Ameritrade Holding Corp. (AMTD) to neutral from buy, and lowered its price target to $21 from $24. It kept its ratings on The Charles Schwab Corp. (SCHW) and E*Trade Financial Corp. (ETFC) at “sell” and “buy,” respectively, but lowered its target prices on those firms and also on discount brokers OptionsXpress (OXPS) and TradeStation Group (TRAD).
Discount brokers lost a vote of confidence from equity analysts at Goldman Sachs Group on Monday. In a report, Goldman cut its recommendation on TD Ameritrade Holding Corp. (AMTD) to neutral from buy, and lowered its price target to $21 from $24. It kept its ratings on The Charles Schwab Corp. (SCHW) and E*Trade Financial Corp. (ETFC) at “sell” and “buy,” respectively, but lowered its target prices on those firms and also on discount brokers OptionsXpress (OXPS) and TradeStation Group (TRAD).
As a group, discount brokerage stocks were cut to “cautious” from “neutral” by Richard Ramsden and his team of securities industry analysts. Low interest rates will be good for capital market activity and funding costs throughout the securities industry, they wrote, “but lower rates will continue to pressure margins and will result in further money market outflows” at the discounters.
The analysts advised clients to buy large-cap banks such as Bank of America Corp. (BAC), JPMorgan Chase & Co. (JPM) and Wells Fargo Corp. (WFC) to take advantage of a home-lending revival. They also believe that JPMorgan, Bank of America, smaller investment banks Lazard Ltd. (LAZ) and Piper Jaffray Cos. (PJC), and alternative-asset managers The Blackstone Group (BX) and KKR Financial Holdings LLC (KFN) will benefit from a surge of stock underwriting and mergers-and-acquisition advisory fees.
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